The psychological contract, a key factor in talent retention

The psychological contract, a key factor in talent retention
Article Mar 13, 2023 3 minutes

The remote work imposed during the pandemic, and the crisis itself, probably changed the way people see work, what they expect from their employer, and consequently their desired psychological contract with the company. Today, mental representations of work change with work experience, but also with salient external factors, such as a global pandemic. Thus our R&D team decided to launch an exploratory study on the notion of the "Psychological Contract" with more than 12,000 data that we collected, coupled with interviews.

What is the desired psychological contract?

To put it simply, today two types of contracts link us to our employer: the employment contract (tangible element) and the psychological contract (intangible element). The latter is defined by the employee's representations of his obligations to his employer. How do I project myself? What place do I give to the trust I have built up over time? How do I see my career? Do I agree with the value and culture of my company? These are all questions to which the psychological contract is linked. If you want to know more, a very nice article on the subject was written by Parlons RH and Dominique Duquesnoy: "Psychological contract: a new look at the "next world".

Psychological contract: How is it measured?

Assuming that the psychological contract contains all the mental representations of an individual (concerning his relationship to work) and consequently all the contractual clauses that cannot be listed in an employment contract, it is very difficult to have a universal measure of it. In order to implement a measure of the psychological contract, we have chosen a specific measurement angle.

Why is it called the desired psychological contract?

For, we measure the preferences and expectations of employees regarding their work relationship. This measurement of the contract will allow HR professionals to use it in recruitment situations, but also in orientation and development.

Our discoveries

Generational differences...

  • 01

    Younger generations have a more transactional approach (focus on the economic exchange between employer and employee) and older generations are more in the relational approach (focus on the quality of the relationship).

  • 02

    The study also showed that younger generations, even if very committed at the start of employment, are less persevering than their elders, less loyal. They like to make an effort, but only if they find it meaningful.

  • 03

    The new generation has a different view of power in business. They place less importance on the power they have over colleagues and more importance on the influence they exert on outcomes.

To summarize...

During our interviews and in accordance with our data, young people show less need to take responsibility and are less willing to make efforts if they do not find meaning in their work. They are no longer looking for a transactional or even relational contract. They want a balanced contract. According to Rousseau (2000), people with a balanced contract are looking for continuous training and development, and they pay attention to their value in the labor market.

The Future of the Psychological Contract and its Assessment

Traditionally, there were two major types of employment contracts: those based on specific exchanges (transactional) and those based on a long-term relationship (relational), with a kind of "mixed" contract combining the two. But things are changing.

Why it's important...

  • Young professionals increasingly prefer the "mixed" or balanced contract, which combines the best of both worlds. 
  • Purely transactional contracts are now seen as temporary or suited only to highly structured jobs. 
  • Relational contracts, favoring a long-term relationship, seem to become rarer and are often associated with older generations. 

With changes in the professional world and the impact of the Covid crisis, understanding the type of psychological contract people desire has become crucial for recruitment and other HR areas.

PerformanSe's approach to assessing the psychological contract

We analyzed a large amount of literature to understand the different types of psychological contracts. Then, we created a questionnaire that assesses three important aspects:

  1. Time Projection: Preference for a lasting work relationship. 
  2. Effort-Reward Ratio: Willingness to put in extra effort if necessary. 
  3. Identification with Values: The importance placed on alignment with the company's values. 

We also evaluated the preference for a strategic career path aimed at improving employability.

What to remember

  • Young people are looking for meaningful work, influenced by the Covid crisis.
  • They want to have more influence on outcomes and situations rather than just leading.
  • Knowing and respecting the type of psychological contract desired by employees fosters harmonious work relationships.

This study helps us better understand employee expectations and adjust our assessments to improve recruitment and talent development processes.

Do you want to know more about the psychological contract?

Discover our test to assess it.


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